U.S. Job Growth Probably Held Below Year's Average in November
By Joe Richter
Dec. 8 (Bloomberg) -- U.S. job growth held near a one-year low in November and the unemployment rate inched higher, reflecting a slowing economy, economists said before a government report today.
Employers added 100,000 workers to payrolls last month, compared with a 92,000 gain in October, according to the median estimate of 79 economists surveyed by Bloomberg News. The unemployment rate probably rose to 4.5 percent from October's five-year low of 4.4 percent.
The economy is increasingly dependent on job growth and rising incomes to weather a contraction in manufacturing and a slump in housing. The Federal Reserve, which meets next week to chart the course of interest rates, anticipates consumer spending will help the economy rebound from the slowest quarterly expansion of the year.
``The consumer is the last crutch,'' said Tim Rogers, chief economist at Briefing.com in Boston. ``The economy still has some heft behind it with the consumer continuing to spend, but the mess seems to be spreading from housing. All of this spells slower growth.''
The Labor Department is scheduled to release the jobs report at 8:30 a.m. in Washington. The October payroll gain was the smallest since a 37,000 increase in October 2005, after the Gulf Coast hurricanes wiped out thousands of jobs.
Forecasts for the increase in payrolls ranged from 40,000 to 190,000. Payroll gains have averaged 147,000 a month so far this year. Estimates for the unemployment rate ranged from 4.4 percent to 4.6 percent.
Confidence Stalls
Later today, a report from the University of Michigan may show that consumer confidence was little changed this month. The university's preliminary sentiment index fell to 92 from a final reading of 92.1 in November, based on the median estimate.
Results of the Labor Department's survey of households for November, used to calculate the month's unemployment rate, may be difficult to interpret, some economists said. The government did the survey a week earlier than usual this year to avoid interfering with Thanksgiving holiday celebrations.
``This could create some seasonal-adjustment problems, so we would place a bit more weight on the payroll survey than usual,'' said economists at Goldman Sachs Group Inc. in New York, in a research note. The payroll figures come from a survey of businesses that took place during the customary week.
The low jobless rate has helped lift wages. The report is also forecast to show that workers' earnings rose 0.3 percent in November, or 4.2 percent from the same time last year. The 12- month gain would be the largest since February 2001.
`Little Evidence'
``To date there is little evidence that the weakness in housing markets is spilling over more broadly to consumer spending or aggregate employment,'' Fed Chairman Ben S. Bernanke said in a Nov. 28 speech. Bernanke said growth will pick up again in the coming year, and emphasized that inflation remains his greatest concern.
Labor markets remained ``tight'' in October and November, according to the Fed's regional survey known as the beige book. The Fed held its target for the benchmark overnight lending rate between banks steady for a third straight month in October. Central bankers next meet Dec. 12.
Business executives aren't expecting a sharp slowdown in growth.
``I think there will be a slight reduction in the U.S. as compared to this year,'' said Alain Belda, chief executive officer of New York-based Alcoa Inc. in a Dec. 1 interview. ``I do not see a major slowdown'' in demand.
Cautious Hiring
Still, some economists said slower economic growth may be starting to make companies more cautious about hiring.
The economy expanded at a 2.2 percent annual rate in the third quarter, the slowest this year. A decline in homebuilding subtracted the most from growth in almost a quarter century. Reports last week suggest weakness may be spreading beyond housing.
Manufacturing, which accounts for about 12 percent of the economy, contracted for the first time in more than three years last month as inventories grew and orders slowed, the Institute for Supply Management reported on Dec. 1.
Fed policy makers will change their focus from inflation to economic growth ``quickly, if the housing sector weakness undermines employment and income,'' said David Resler, chief economist at Nomura Securities International inc. in New York. ``Such an outcome would risk setting in motion a vicious cycle of falling income and employment leading to further cuts in demand and production.''
Factories Cut Payrolls
Factories probably shed 15,000 jobs last month after a loss of 39,000 in October, according to the Bloomberg News survey median. Haseeb Ahmed, an economist at JPMorgan Chase & Co. in New York, predicted construction payrolls fell by 30,000.
Rising claims for jobless benefits probably reflect the job cuts in construction and manufacturing. The four-week moving average of first-time applications rose to 328,750 last week, the highest since May, the Labor Department reported yesterday.
Ford Motor Co., the second-largest U.S. automaker, last week said it will cut another 15,000 vehicles from its North American production plan for this quarter after reporting an unexpected decline in November U.S. sales. The Dearborn, Michigan-based company has been cutting jobs and closing plants as it trims inventories.
</PRE>To contact the reporter on this story: Joe Richter in Washington [color=#0000ff][email protected][/color] </P>
Last Updated: December 8, 2006 00:03 EST
By Joe Richter
Dec. 8 (Bloomberg) -- U.S. job growth held near a one-year low in November and the unemployment rate inched higher, reflecting a slowing economy, economists said before a government report today.
Employers added 100,000 workers to payrolls last month, compared with a 92,000 gain in October, according to the median estimate of 79 economists surveyed by Bloomberg News. The unemployment rate probably rose to 4.5 percent from October's five-year low of 4.4 percent.
The economy is increasingly dependent on job growth and rising incomes to weather a contraction in manufacturing and a slump in housing. The Federal Reserve, which meets next week to chart the course of interest rates, anticipates consumer spending will help the economy rebound from the slowest quarterly expansion of the year.
``The consumer is the last crutch,'' said Tim Rogers, chief economist at Briefing.com in Boston. ``The economy still has some heft behind it with the consumer continuing to spend, but the mess seems to be spreading from housing. All of this spells slower growth.''
The Labor Department is scheduled to release the jobs report at 8:30 a.m. in Washington. The October payroll gain was the smallest since a 37,000 increase in October 2005, after the Gulf Coast hurricanes wiped out thousands of jobs.
Forecasts for the increase in payrolls ranged from 40,000 to 190,000. Payroll gains have averaged 147,000 a month so far this year. Estimates for the unemployment rate ranged from 4.4 percent to 4.6 percent.
Confidence Stalls
Later today, a report from the University of Michigan may show that consumer confidence was little changed this month. The university's preliminary sentiment index fell to 92 from a final reading of 92.1 in November, based on the median estimate.
Results of the Labor Department's survey of households for November, used to calculate the month's unemployment rate, may be difficult to interpret, some economists said. The government did the survey a week earlier than usual this year to avoid interfering with Thanksgiving holiday celebrations.
``This could create some seasonal-adjustment problems, so we would place a bit more weight on the payroll survey than usual,'' said economists at Goldman Sachs Group Inc. in New York, in a research note. The payroll figures come from a survey of businesses that took place during the customary week.
The low jobless rate has helped lift wages. The report is also forecast to show that workers' earnings rose 0.3 percent in November, or 4.2 percent from the same time last year. The 12- month gain would be the largest since February 2001.
`Little Evidence'
``To date there is little evidence that the weakness in housing markets is spilling over more broadly to consumer spending or aggregate employment,'' Fed Chairman Ben S. Bernanke said in a Nov. 28 speech. Bernanke said growth will pick up again in the coming year, and emphasized that inflation remains his greatest concern.
Labor markets remained ``tight'' in October and November, according to the Fed's regional survey known as the beige book. The Fed held its target for the benchmark overnight lending rate between banks steady for a third straight month in October. Central bankers next meet Dec. 12.
Business executives aren't expecting a sharp slowdown in growth.
``I think there will be a slight reduction in the U.S. as compared to this year,'' said Alain Belda, chief executive officer of New York-based Alcoa Inc. in a Dec. 1 interview. ``I do not see a major slowdown'' in demand.
Cautious Hiring
Still, some economists said slower economic growth may be starting to make companies more cautious about hiring.
The economy expanded at a 2.2 percent annual rate in the third quarter, the slowest this year. A decline in homebuilding subtracted the most from growth in almost a quarter century. Reports last week suggest weakness may be spreading beyond housing.
Manufacturing, which accounts for about 12 percent of the economy, contracted for the first time in more than three years last month as inventories grew and orders slowed, the Institute for Supply Management reported on Dec. 1.
Fed policy makers will change their focus from inflation to economic growth ``quickly, if the housing sector weakness undermines employment and income,'' said David Resler, chief economist at Nomura Securities International inc. in New York. ``Such an outcome would risk setting in motion a vicious cycle of falling income and employment leading to further cuts in demand and production.''
Factories Cut Payrolls
Factories probably shed 15,000 jobs last month after a loss of 39,000 in October, according to the Bloomberg News survey median. Haseeb Ahmed, an economist at JPMorgan Chase & Co. in New York, predicted construction payrolls fell by 30,000.
Rising claims for jobless benefits probably reflect the job cuts in construction and manufacturing. The four-week moving average of first-time applications rose to 328,750 last week, the highest since May, the Labor Department reported yesterday.
Ford Motor Co., the second-largest U.S. automaker, last week said it will cut another 15,000 vehicles from its North American production plan for this quarter after reporting an unexpected decline in November U.S. sales. The Dearborn, Michigan-based company has been cutting jobs and closing plants as it trims inventories.
</PRE>To contact the reporter on this story: Joe Richter in Washington [color=#0000ff][email protected][/color] </P>
Last Updated: December 8, 2006 00:03 EST
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